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NY I81261




May 16, 2002

CLA-2-98:RR:NC:3:353 I81261

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.50, 9802.00.90

Ms. Sandra Tovar
CST, Inc.
120 C Commerce Circle
Fayetteville, GA 30214

RE: The tariff classification of socks from Mexico or Honduras.

Dear Ms. Tovar:

In your letter dated April 26, 2002, received in this office on April 26, 2002, on behalf of Gold Toe Brand, you requested a tariff classification ruling.

You present four (4) scenarios and give an opinion as to whether 9802.0050 or 9802.0090 is applicable. You also ask if the socks may be marked “Made in USA.”

The four scenarios are:

Scenario 1

US yarns are knit to shape of a sock in US, toes are not closed Socks are dyed in the US
Toes are closed by sewing with US thread in Mexico Socks are boarded for drying and wrinkle removal in Mexico Socks are packed in plastic bags or banded in Mexico

Scenario 2

US and foreign yarns are knit to shape of a sock in US, toes are not closed Socks are dyed in the US
Toes are closed by sewing with US thread in Mexico Socks are boarded for drying and wrinkle removal in Mexico Socks are packed in plastic bags or banded in Mexico

Scenario 3

US and foreign yarns are knit to shape of a sock in US, toes are not closed Socks are bleached or dyed in Mexico
Toes are closed by sewing with US thread in Mexico Socks are boarded for drying and wrinkle removal in Mexico Socks are packed in plastic bags or banded in Mexico

Scenario 4

US and foreign yarns are knit to shape of a sock in US, toes are not closed Socks are dyed in the US
Toes are closed by sewing with US thread in Honduras Socks are boarded for drying and wrinkle removal in Honduras Socks are packed in plastic bags or banded in Honduras

Subheading 9802.00.50, HTSUS, provides a partial or complete duty exemption for articles exported from and returned to the U.S. from Mexico after having been advanced in value or improved in condition by repairs or alterations, provided the documentary requirements of section 181.64, Customs Regulations (19 C.F.R. §181.64), are satisfied. However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. Treatment is also precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles.

Subheading 9802.00.90 provides for the duty-free entry of “Textile and apparel goods, assembled in Mexico in which all fabric components were wholly formed and cut in the United States, provided that such fabric components in whole or in part, (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process; provided the goods classifiable in chapters 61, 62, or 63 may have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma-pressing after assembly as provided for herein.” Components may also be subjected to operations incidental to the assembly before, during, or after the assembly without losing the benefits of the subheading.

Although you did not request such consideration, Subheading 9802.00.80 provides for partial duty exemption of “Articles, except goods of heading 9802.00.90, assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting.” All three requirements of HTSUSA subheading 9802.00.80 must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to a duty upon the full value of the imported assembled article, less the cost or value of the U.S. components assembled therein, provided there has been compliance with the documentation requirements of section 10.24, Customs Regulation (19 C.F.R. §10.24).

Chapter 98, Subchapter II, Note 5 “No imported article shall be accorded partial exemption from duty under more than one provision of this subchapter.” Therefore, for each scenario, this office will only discuss the 9802 number that is most advantageous for obtaining a full or partial exemption from duty.

For Scenarios 1 and 2, sewing the toes closed is considered an assembly operation, and boarding and packing or banding operations are considered alterations. When an assembly operation is performed, the boarding and packing or banding operations are considered operations incidental to the assembly. Subheading 9802.00.90 allows for all these operations.

For Scenario 3, bleaching or dying is an acceptable operation specifically allowed for under 9802.00.90. Sewing the toes closed is considered an assembly operation, and boarding and packing or banding operations are considered alterations. When an assembly operation is performed, the boarding and packing or banding operations are considered operations incidental to the assembly. Subheading 9802.00.90 allows for all these operations.

For Scenario 4, sewing the toes closed is considered an assembly operation, and boarding and packing or banding operations are considered alterations. When an assembly operation is performed the boarding and packing or banding operations are considered operations incidental to the assembly. Subheading 9802.00.80 allows for all these operations.

Section 12.130(c), Customs Regulations, provides that any product of the United States that is returned after having been advanced in value or improved in condition abroad, or assembled abroad, shall be a foreign article. On July 11, 2000, Customs published T.D. 00-44 in the Federal Register (65 FR 42634), stating that effective October 10, 2000, Customs will no longer apply 19 CFR 12.130(c) for purposes of country of origin marking. Therefore, in accordance with T.D. 00-44, Section 12.130(c) and Section 102.21(c)(4), the country of origin of the socks will be the United States. Section 12.130(c) remains in effect for duty and quota purposes.

If a good is determined to be an article of U.S. origin, it is not subject to the country of origin marking requirements of 19 U.S.C. §1304. Whether an article may be marked with the phrase "Made in the USA" or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508 on the propriety of proposed markings indicating that an article is made in the U.S.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Kenneth Reidlinger at 646-733-7033.

Sincerely,

Robert B. Swierupski
Director,

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